Achieve Life Sciences Inc (ACHV) 2016 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the OncoGenex second-quarter 2016 earnings conference call. (Operator Instructions) As a reminder, this call may be recorded.

I would now like to introduce your host for today's conference, Mr. Jim DeNike, Senior Director of Corporate Communications. Please go ahead, Sir.

Thanks, Christy, and thanks, everyone, for joining us today. With me from OncoGenex are Scott Cormack, President and Chief Executive Officer, John Bencich, Chief Financial Officer and Dr. Cindy Jacobs, Chief Medical Officer. Jaime Welch, our Vice President of Marketing and Corporate Communications, will also be available for the Q&A.

Before we begin I'd like to remind everybody that today's conference call contains forward-looking statements based on current expectations. These statements are only predictions and actual results may vary materially from those projected.

Please refer to OncoGenex's documents filed with the SEC concerning factors that could affect the Company, copies of which are available on the website. I will now turn the call over to Scott.

Thanks, Jim. On the call today, I will provide an overview of our key clinical development programs including the two Phase III trials evaluating custirsen in prostate and lung cancer.

I'll also review our apatorsen bladder program and then turn the call over to John for an update on our financials.

Starting with custirsen, our AFFINITY trial is expected to read out shortly, specifically by the end of this quarter. Affinity is a Phase III clinical trial evaluating the survival benefit for custirsen in combination with cabazitaxel, a second line chemotherapy in approximately 630 men with castrate-resistant prostate cancer.

Custirsen is the only product currently in a Phase III clinical trial for men following initial chemotherapy failure. While a number of new therapies have been approved in recent years, most prostate cancer treatments eventually fail and new options are needed for men with advanced disease.

Despite this need, there is limited clinical research of new therapies being conducted in late stage prostate cancer. For these reasons, we believe there is a unique opportunity for custirsen in this setting. These opportunities include the potential to extend the lives of men with metastatic prostate cancer who are experiencing disease progression following initial chemotherapy. This is the patient population currently being evaluated in the AFFINITY trial.

Another potential opportunity is to evaluate custirsen in combination with chemotherapy and androgen deprivation in men with high-volume and high-risk disease based on the compelling results from the completed CHAARTED and STAMPEDE trials. This opportunity would require an additional clinical trial to expand our initial label assuming, of course, success in the AFFINITY trial. We look forward to sharing the results of the AFFINITY trial in the near future.

Our second Phase III clinical trial, ENSPIRIT, is in an ongoing pivotal study which is evaluating the survival benefit for custirsen in combination with docetaxel treatment as second line chemotherapy in patients with non-small cell lung cancer. A final interim futility analysis with more rigorous criteria for continuing the trial was successfully completed in July 2015, and the trial is continuing as planned.

Based on current ENSPIRIT enrollment projections we believe final survival results could be available by the first half of 2017. Similar to prostate cancer the increasing use of new treatments in earlier lines of therapy will lead to patients receiving more treatments. We expect this will lead to overall market expansion.

We also expect chemotherapy to remain a fundamental treatment option for non-small cell lung cancer, regardless of histology because not all patients respond to new therapies and for those that do respond, unfortunately there disease will likely progress. We believe that custirsen could provide an important option to late stage patients by improving the current survival benefit offered by chemotherapy alone in patients who have received previous treatments.

We are very excited about custirsen's potential in both of these indications as either could make a meaningful difference in patients' lives and could also provide a significant revenue opportunity for OncoGenex.

Turning to our other asset, apatorsen, this compound is designed to target Hsp27, a target that has been associated with tumor progression and treatment resistance. Apatorsen is currently being evaluated in bladder, lung, and prostate cancer.

Based on previous results in non-muscle invasive bladder cancer, we are close to finalizing an IND submission with a pivotal study that would include a safety lead in entry randomized cohorts in three distinct patient populations. We do not intend to fund further development of further development of this program without a collaboration partner or before we report AFFINITY results.

In addition to our progress in the non-muscle invasive setting, we are also expecting results from our largest apatorsen trial to date which is for metastatic bladder cancer. Borealis-2 is evaluating apatorsen in combination with docetaxel treatment compared to docetaxel alone in patients with advanced or metastatic bladder cancer who have disease progression following first-line platinum-based chemotherapy.

The trial has randomized approximately 200 patients and results are expected in the fourth quarter of 2016.

We are encouraged by the apatorsen data collected to date in bladder cancer and look forward to additional results by the end of this year. That concludes my summary of our clinical development programs and our upcoming milestones.

At this time I'd like to turn the call over to John, who will review our current cash position and second-quarter financial results. John?

Thanks, Scott. Our cash position remains strong and should allow us to achieve the milestones that Scott just summarized without the need to raise additional capital.

As of June 30, 2016, our cash, cash equivalents and short-term investments were $39.7 million compared with $55.2 million as of December 31, 2015. Based on our current expectations we believe that our cash position will be sufficient to fund our currently planned operations into the third quarter of 2017.

Depending on timing of enrollment or event driven final analyses the expected key milestones and activities include announcement of the Phase III AFFINITY trial results in the third quarter of 2016, announcement of the Phase II Borealis-2 trial results in the fourth quarter of 2016, completion of a submission-ready IND application for apatorsen treatment in patients with non-muscle invasive bladder cancer, and announcement of the Phase III ENSPIRIT trial results by the first half of 2017.

Shifting to our results of operations for the second quarter, revenue for the three and six months ended June 30, 2016 was $2.1 million and $5.1 million, respectively, compared to $4 million and $5.4 million for the three and six months ended June 30, 2015, respectively. Revenue consists of recognition of deferred collaboration revenue representing our efforts in the development of custirsen.

As of June 30, 2016 the full amount of the advanced reimbursement payment has been recognized into collaboration revenue.

Total operating expenses for the three and six months ended June 30, 2016 were $8.5 million and $15.9 million, respectively, compared to $9.6 million and $16 million for the three and six months ended June 30, 2015, respectively. Net loss for the three and six months ended June 30, 2016 was $6.9 million and $10.6 million, respectively, compared to $6 million and $10.5 million for the three and six months ended June 30, 2015, respectively.

That concludes the summary of our second quarter financial results. I would now like to turn the call back over to Scott.

Thanks, John. As discussed we expect to report important data from our Borealis-2 bladder cancer trial in the fourth quarter of this year as well as Phase III ENSPIRIT lung cancer data expected by the first half of 2017. Following years of hard work and commitment from so many who have supported the custirsen program we are eagerly awaiting the Phase III AFFINITY trial results in prostate cancer which are expected in the near future. Thank you all for that effort.

I will conclude by saying thanks again for your continued interest in OncoGenex and we look forward to speaking with you shortly.

I would now like to invite the operator, Christy, to open the lines for questions.

(Operator Instructions) Chad Messer, Needham and Company.

You know, a little bit of good deja vu on this quarterly call. I was just reading my notes from last quarter -- we are basically waiting for the same studies. It's all just a lot closer now so it's getting really exciting. But one thing I did notice on the release is that you guys took a charge on your P&L and put a liability on your balance sheet for litigation which I'm assuming is the disputed Teva payment with Ionis.

Just wondering if there is -- why you felt you needed to do that now and if there are any updates on that.

Thanks for the questions, Chad. And I certainly agree, as you said at the beginning of your question, our milestones are coming up closer. We've got the three kind of primary ones that we are tracking now with AFFINITY, ENSPIRIT and Borealis-2 and obviously looking forward to those data sets.

Specifically to your question, I'll turn over the details to John in a second but you are right, we did take that charge and, as you'll see, detailed quite explicitly in the Q, we have settled the dispute with Ionis in respect to the Teva payments.

As you know, that's been something that has been in discussion for quite some time with Ionis and we wanted to and look forward to putting that behind us and so everything is now settled and so we both can go forward clean and not be distracted by any potential litigation. So, glad that is now behind us.

Katherine Xu, William Blair.

I'm just wondering, Scott, can you just give us some granularity on how the last days are going before you review the AFFINITY data? Are you doing the survival sweeps every so many days? And has the database been locked and then after it is locked, do you expect the turnaround time and details like that would be very helpful.

Sure. I'll let Cindy address a lot of those questions but as you know, we've been tracking for AFFINITY for some time and really waiting for the events to mature for us so all hands on deck have been really there to clean the data set as quickly as possible, and specifically for site closure wanting to really focus on making sure that sites have that have had all their patients complete follow-up and so on get closed off so that we can basically wrap everything up from a financial perspective as well. And Cindy can take you through the data or through the status of our lock, etc.

Sure, Katherine, so we started our survival sweep in June and it has been completed as of July. The database has been locked and it is now at our statistical independent vendor that will be now looking at those results and we should hear within -- obviously in the near future, certainly by the end of this quarter.

Great. And then with regards to the potential market positioning going forward, so this is going to be a second line label.

Let's say if AFFINITY is successful, what is your strategy to launch? And what is the market looking like these days? Are there -- the patients who are taking Taxotere, are they -- are they suddenly decreasing or what kind of trends are you observing? And you mentioned maybe you need to go to the frontline. And then could you just elaborate a little bit on that strategy as well?

I'll turn this one over to Jamie who is also online and I think you have met Jamie in the past on the marketing front. So you can address some of the specifics on the landscape but yes, the initial indication would be for obviously the trial would be in combination with cabazitaxel following initial chemotherapy failure.

The comment we made about opportunities would be subject to other trials as we said in the previous statements. It's not something that is immediate in the target site, but if we are looking to expand market potential, there are some areas of interest as you remember. Even our very first clinical trial we ever did, we combined with hormone ablation strategy. So that's always been an area of interest to us and I think if you were looking at label expansion pursuing opportunities in combination would make sense if we see success in AFFINITY for expansion opportunities.

And then, there's a lot of interest from our perspective and, I think that of clinical oncologists, with respect to what has been observed for chemotherapy being used earlier in the disease cycle and specifically referring to the CHAARTED and STAMPEDE trials where we have seen, I would say, unprecedented improvements in survivals when you are using combination of chemotherapy and androgen deprivation in high risk high-volume patient populations.

So I think from a -- an expansion and interest there would be some interesting obviously initiating trials like that to potentially expand that growing trend of chemotherapy utilization.

Jamie, if you wouldn't mind just speaking to Katherine's question on generally where cabazitaxel is being used and how patients are being treated in that paradigm, I think that would be helpful for Katherine and the listeners.

Sure. I think the only thing I would add to Scott's comments about potential future opportunities is that cabazitaxel and Taxotere are still definitely being used in the treatment of prostate cancer, specifically after failure of the anti-androgen therapies.

From the data that we've seen, about 80% of patients will receive a first line or second line treatment following their first line, and about 60% of those patients will go on to a third line treatment so the market is definitely expanding and I think the data is maturing as well as they are cycling through these previous therapies. So, our initial positioning would definitely be in patients who are eligible to receive or expecting a benefit from treatment with cabazitaxel and the addition would be to bring CUBICIN into that treatment paradigm.

Okay.

(Operator Instructions) I'm not showing any further questions. I would now like to turn the call back over to CEO Scott Cormack for any further remarks.

Thanks, Christy, and thank you again for participating on this call and we do look forward to updating you again in the not-too-distant future, specifically for AFFINITY. Thanks, again, for participating.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.